Debt Review After a Job Loss or Pay Cut

What happens with debt review after you’ve lost your job or have had a pay cut? Income is a prerequisite of debt review, as you have to make repayments to a payment distribution agency (PDA) to pay off your debts. As if losing your job or suffering a pay cut isn’t treacherous enough, the consequences of defaulting under debt review can add to your overall financial disarray – you may be forced to undergo voluntary (or involuntary) sequestration or administration orders.

What happens when you lose your job or lose a large chunk of your income? In this post, Debtco Group provides an overview of what you can expect after you lose your job or part of your income and how Debtco Group is here to help.

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What Happens When You Suffer a Pay Cut under Debt Review?

If the amount you can pay creditors each month drops, talk to your debt counsellor. Don’t default or pay less without first creating an agreement! This can lead to legal action from your creditors. They’ll send you a Section 129 letter describing your options: debt mediation (an alternate dispute resolution agent), debt review (which the court won’t let you access because you defaulted under your existing debt review agreement), or repaying the debt in full.

Rather, speak to your debt counsellor and let them rearrange your payments and agreements. Under the National Credit Act, your creditors may not refuse “reasonable” negotiation efforts to relieve you of over-indebtedness by your debt counsellor. Your debt counsellor will issue Form 17.3 to inform your creditors of a sudden change in circumstances, which is regulated by the NCR (and not specifically accounted for in the NCA).

What Happens When You Lose Your Job under Debt Review

As discussed above, you must have a job or income under debt review to afford monthly repayments, no matter how small. If you lose your source of income, you should tell your debt counsellor immediately. They’ll issue a Form 17.3 detailing your change in circumstances.

After you lose your job, your debt counsellor will request:

• Proof of the incident, namely a letter of dismissal or retrenchment from the employer
• A letter confirming the package to be paid out from the loss of employment, whether it is from the former employer or South African Revenue Services (SARS)
• Whether you have any insurance that covers these circumstances, and if so, all details relating to the policies
• If you took out an insurance policy through the credit provider’s insurance carrier, the credit provider should assist you with lodging the claim with the insurer
• If you opted to take an insurance policy with an independent insurer, you should lodge the claim with your insurer

If you have no source of income, the NCR sets out that “credit providers may use their discretion and consider the matter based on its own merits and take the actions which are appropriate in the circumstances.”

Let Debtco Group Assist!

Let Debtco Group assist you with the process and recover under debt review after you’ve lost your job, source of income, or have suffered a pay cut. Our debt counsellors will negotiate with your creditors to reach the most favourable outcome, ensuring everyone is happy.

To learn more, contact us today.